Apple - missed opportunity ? / by heathrowkennedy

Just as Apple were unveiling their latest iterations of the iPhone I was sitting listening to a piano recital.   I include that detail because the accomplished concert pianist was playing on an upright piano.  It's a perfectly good piano but it wasn't a grand piano.   It was a 'fit for purpose' piano and the critical factor in the experience was the pianist.   The thought that all this triggered to the music of Debussy was it's really not the instrument that counts, it's what you do with it. We have become very attached to our smartphones or, more accurately, what they allow us to do - we are drawn fleetingly to their design and brand but more and more it's what they facilitate.   All of this is being accelerated with a category release cycle which has a shorter and shorter half-life.   That is making it increasingly difficult for a company such as Apple to dominate in the way that they once did especially when new products released contain only marginal improvements in functionality.

The big news expected from Apple was a change to their pricing strategy and a vertical expansion of what is a very "democratic" offering into a wider range embracing a "budget" iPhone at one end and a "luxury" offering at the other.   The sound logic being that a lower priced and physically differentiated product would allow Apple to compete more effectively in advancing economies such as China and India (where phones are not subsidized by the network provider) and the higher-end offering would protect brand equity and ensure the brand still appeals to those who crave being a little different.

Apple seem to have had a failure of nerve.

What they did launch was a slighter cheaper iPhone 5C in a range of colourful polycarbonate shells and a slightly more expensive iPhone 5S which comes in more 'luxurious' colours of gold, silver and dark grey with the technological enhancement of a finger print scanner on the home key.

In terms of differentiation this is dancing on the head of a pin.   Apple should have gone for a wider price point range accelerating growth in new markets (getting more users) and doing more to create a genuinely more luxurious top offering with real material differentiation, commanding a much higher pice (retaining HWI and opinion formers).

Survey work in the UK post the launch announcement has shown that about 1/3 of people in the marketplace who were waiting on the announcement before changing their phone will actually go ahead and chose one of the new phones.

Add in the fact that the popular media reaction has been less than the usual slavish adulation, a 5% drop in stock price and you can see that Apple is looking a lot less invulnerable than usual.   All is not lost but the smart phone market is only going to become more competitive and tougher for Apple to justify their prices without a serious "wow" factor.

Apple need more people using iOS I'm not sure this week's news will help much.